National Financial Switch (NFS) is the largest network of shared automated teller machines (ATMs) in India. Thus, NFS functions as the backbone of Indian ATM network. NFS was designed and implemented by the Institute for Development and Research in Banking Technology (IDRBT) in 2004. IDRBT launched the National Financial Switch on 27 August 2004, by connecting the ATMs of three banks. Thereafter, IDRBT worked towards the goal of inter-connecting the ATMs in the country for facilitating convenience banking.
How did National Financial Switch (NFS) come under NPCI?
National Payments Corporation of India (NPCI) was launched with the intention of bringing Retail Payment systems in India under a separate entity. When RBI authorised NPCI to take over the operations of NFS, IDRBT handed over NFS to NPCI. IDRBT hived off the operational aspects of NFS to focus more on it’s key targets of research and development. NPCI took over NFS operations from December 14,2009. ATMs were the first alternate payment channel introduced in India. ATMs propelled the journey towards digital channels and digital banking in India.
National Financial Switch (NFS) is the largest network of shared automated teller machines (ATMs)in India. The ATM network launched by IDRBT,is managed by NPCI.
What is an ATM network?
All the ATM’s of a bank are connected to an ATM switch. An ATM network is a network that connects the ATM switches of different banks. An ATM network can be set up with two ATM switches to hundreds of ATM switches of different banks. A customer can utilise another bank ATM only if both banks are connected through the same ATM network. ‘Inter-operability of different bank ATMs are made possible through ATM network.
What is meant by On-US and Off-US transactions in an ATM?
On-Us transaction means that customer is using same bank ATM and debit card for the transaction. If a customer of Bank A is using the debit card issued to him in his account in the ATM of Bank A itself, it is an On-Us transaction.
When a customer of Bank A is using the debit card issued to him in his account in the ATM of Bank B, it is labelled an Off-Us transaction. Off-Us transaction means that customer is using different bank ATM and debit card for the transactions.
What are the advantages offered by ATM network?
ATM network is not required for carrying out On-Us transactions. However, Off-US transactions can be carried out by a customer only if card issuing bank and ATM providing bank are part of the same ATM network. An ATM network facilitates formation of a countrywide network replacing all bilateral networks. Further, NFS Helpdesk team monitors transactions on 24 x 7 and generates alerts to the related banks when ATMs go down thereby ensuring uninterrupted service.
Common terms associated with ATM transactions
Approved: Transaction is approved and ATM has dispensed cash fully or partially
Declined: Transaction is declined and no cash dispensed by ATM.
Business Decline: Declines based on parameter settings for the account of customer or business logic. Exceeding withdrawal limit, withdrawal beyond balance available, invalid account number, invalid PIN etc are major causes for business decline.
Technical decline: Declines on account of technical issues/ network issues come under this category.
NFS has evolved as a strong and sustainable operational model with indigenous capabilities. The services and functions of NFS are at par with other major and well-established global switch networks. NFS catalysed the journey of banking in India towards digital channels and digital banking.